WASHINGTON – The Iraq Study Group report delivered to President Bush yesterday contains 79 separate recommendations – but not one explains how American forces can better fight and defeat the insurgency, only ways to bring the troops home.

Declaring the situation “grave and deteriorating,” the high-powered commission proposed the United States talk directly to Iran and Syria to get their cooperation, and commit to removing U.S. combat troops in early 2008.

In a major policy report presented to Bush and Congress, the panel also recommended taking a harder line with the fledgling Iraqi government by threatening to reduce or cut off military and financial support unless it does more to crack down on militia death squads.

Reaction to the much-anticipated report was swift.

* President Bush called it was a “tough” assessment of U.S. involvement in Iraq and said he would treat all of its recommendations seriously, but he didn’t publicly embrace any of the proposals.

* White House spokesman Tony Snow later rejected the call for America to have open dialogue with enemy Iran, saying that could happen only after the Islamic state halted uranium enrichment.

* Democrats in Congress heartily embraced the study, saying it offered Bush some good ideas and put the burden on him to accept some of them, while Republicans generally had a polite but non-committal response.

* In Iraq, U.S. troops said they didn’t believe that Iraqi forces were prepared yet to take over security and questioned whether GIs could come home in 2008.

* As the report was being debated in the United States, 10 American troops were killed in Iraq in four separate attacks amid worsening violence.

Critics said the study was foolish to suggest pressure the Iraqi government to do more when it’s not yet capable.

“Simply calling for a weak and divided Iraqi government to act in the face of all the forces that are tearing it apart is almost feckless,” said Anthony Cordesman of the Center for Strategic and International Studies.

“It comes far too close to having the U.S. threaten to take its ball and go home if the Iraqis do not play the game our way.”

The group’s chairman, Bush family friend and former Secretary of State James Baker, warned that “there is no magic formula to solve the problems in Iraq” – but added, in a stinging rebuke to Bush, “We can no longer afford to stay the course.”

“Our ship of state has hit rough waters. It must now chart a new way forward,” added former Rep. Lee Hamilton of Indiana, the group’s Democratic co-chairman.

The panel, which was made up of five prominent Democrats and five prominent Republicans, offered a total of 79 comprehensive political, military and diplomatic and other recommendations.

The report was released as pressure mounted on Bush to come up with an exit strategy from Iraq amid rising opposition to a war that has resulted in the deaths of 2,900 U.S. troops and injuries to close to 21,000 servicemen and women.

It warns of even greater chaos and bloodshed, which could spread outside Iraq if action is not taken soon to change policy.

“If the situation continues to deteriorate, the consequences could be severe. A slide toward chaos could trigger the collapse of Iraq’s government and a human catastrophe,” the report said.

“Neighboring countries could intervene. Sunni-Shia clashes could spread. Al Qaeda could win a propaganda victory and expand its base of operations. The global standing of the U.S. could be diminished. Americans could become more polarized,” the report continued.

The commission recommended the number of U.S. troops embedded to train Iraqis should increase dramatically, from 3,000 to 4,000 currently to 10,000 to 20,000.

Commission member William Perry, defense secretary in the Clinton administration, said those could be drawn from combat brigades already in Iraq.

Yesterday morning, a stoic Bush listened to the panel’s report at a White House meeting with all 10 commission members and said later he would take the recommendations “seriously.”

“We applaud your work. We take it very seriously and we’ll act on it in a timely fashion,” Bush told the panel at a meeting in the White House Cabinet Room.

But aides were quick to point out that the president is also waiting for findings of special study groups at the Pentagon, the White House National Security Council and the State Department before making final decisions about any midcourse correction on Iraq.

That decision could involve “cherry-picking” different proposals from different reports, according to White House officials.

But the Baker panel’s report contained many recommendations that Bush is certain to oppose – at least for now.

It calls for direct talks with Syria and Iran – two nations the Bush administration believes is fomenting the violence in Iraq.

The talks would be part of a regional diplomatic offensive that would also seek solutions to the Israeli-Palestinian conflict and the conflict in Lebanon.

“If we don’t talk to them, we don’t see much progress being made,” Hamilton said at a press conference on Capitol Hill.

“You can’t look at this part of the world and pick and chose which countries you’re going to deal with.”

On the military side, the Baker commission is calling for the transformation of the mission of U.S. forces in Iraq from combat to a support and advisory role.

It would accomplish this by “redeploying” 15 U.S. combat brigades by the first quarter of 2008 and increasing fivefold the number of U.S. trainers embedded in Iraqi military units.

However, the report calls for special rapid reaction teams and Special Forces to remain in the area to fight al Qaeda and other foreign terrorist groups.

“Despite a massive effort, stability in Iraq remains elusive and the situation is deteriorating,” the report said. “The ability of the United States to shape outcomes is diminishing. Time is running out.”

The commission also briefed members of the Iraqi government by teleconference, and one official there agreed that Iraqis must take responsibility for their own security.

Even though the Baker commission stopped short of endorsing Democratic calls for a phased withdrawal of U.S. troops by a certain date, newly empowered congressional Democrats embraced the panel’s findings.

“The report underscores the message the American people sent one month ago. There must be change and there is no time to lose,” Senate Democratic leader Harry Reid (Nev.) told reporters.

In another major recommendation for change in policy, the Baker panel called for a tougher approach to Iraq’s Shiite-dominated government.

It said Iraqi leaders should do more to disarm militias and achieve national reconciliation and called for talking – and even giving amnesty – to insurgent leaders and even rabidly anti-American Shiite cleric Muqtada al-Sadr.

“If the Iraqi government does not make substantial progress toward the achievement of milestones on national reconciliation, security and governance, the U.S. should reduce its political, military and economic support for the Iraqi government,” the report said.

The Iraq Study Group was created last spring by Congress.

The work of the group gained in importance in the wake of the congressional elections, in which growing opposition to the Iraq war was a dominate issue.

Many analysts initially believed the bipartisan panel would provide political cover for both sides for a U.S. exit from Iraq.

But the atmosphere between the panel and the White House has grown tense in recent weeks because of stories in the news media that Baker, a close friend and longtime confidant of Bush’s father, ex-President George H.W. Bush, was part of an effort by the father to step in and get his son out of political trouble.

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Iraq Study Group key recommendations

* Gradual pullback of 15 American combat brigades ending in the first quarter of 2008.

* Supports any efforts to achieve ethnic peace; has problems with amnesty for killers of American troops.

* Agrees commitment is not open-ended, but says troops will remain until victory is achieved.

* Supports discussions on delivering more equipment that are already under way.

* Intelligence agencies and Pentagon agree with that assessment, and are pushing for more resources.

* If the White House doesn’t reject it, Israel certainly will because it objects to being dragged into the Iraq situation.

About the panel

* Co-chaired by former Secretary of State James Baker, who has longtime ties to the Bush family, and former Democratic Rep. Lee Hamilton

* Republicans: Former Attorney General Edwin Meese; retired Supreme Court Justice Sandra Day O’Connor; former Sen. Alan Simpson; and former Secretary of State Lawrence Eagleburger, who replaced former CIA Director Robert Gates when he was nominated to be defense secretary

* Democrats: Vernon Jordan, a former adviser to President Bill Clinton; Leon Panetta, former White House chiefofstaff to Clinton; former Defense Secretary William Perry; and former Sen. Charles Robb

* Group spent four days in Iraq and consulted more than 170 individuals, including President Bush, Clinton, British Prime Minister Tony Blair and Iraqi leaders

* Group was formed in March at urging of Virginia Republican Rep. Frank Wolf, who sponsored a $1 million appropriation to fund the “fresh eyes” on U.S. policy; organized by think tanks